The Great Deflation (Corrected)

Deductive Thoughts: Global interest rates continue their decline towards zero. Soon, most major economies will be under the pressure of deflation. On the one hand, negative interest rates have shown to be not viable to boost inflation , risking a debt crisis of the private sector piling up "free" loans. On the other hand, quantitative easing also shown to be not viable, risking a debt crisis of the public sector piling up private debt.

Inductive Thoughts: Global economic policies will need to change this coming year, or a reason to inflate must be put forth. Major economies cannot sustain previous growth rates as they begin to fill in to all the available room. Two possible solutions: War; or Mars. Wars are infamous for their spur of inflationary periods. However, a global effort to colonize Mars would prove just as potent to spur growth.

The Trade: Sell USD and buy GOLD into the devaluation of the dollar. Sell stocks, sell bonds (interest rates are not returning to previous levels, so bonds no longer safe haven).

Comment:

Interest rates have begun their descent. Bond yields have fallen to support and bounced to the midline of the channel, expecting yields to continue to fall below support into Q1 2020. S&P slipped over half a percent today, I think this is the beginning of the slide for equities. Dollar has already begun weakening and gold rising.

10 year treasury notes issued at the end of the financial crisis have already begun maturing. This has placed increased pressure on the federal reserve to buy back those treasury deposits. Federal balance sheet is once again rising as the fed injects money into the economy to stabilize the repo market.